Technical Analysis

Deepak Nitrite is in a long-term uptrend

Yoganand D | Updated on November 17, 2019 Published on November 17, 2019

With signs of trend-reversal, one can consider partial profit-booking, and stay invested

Here are the answers to readers’ queries on the performance of their stock holdings.

I have bought shares of Deepak Nitrite (₹263) and Biocon (₹265). I want to stay invested for the long term.

Sarath Chandra Sai

Deepak Nitrite (₹353.1): The stock of Deepak Nitrite is in an uptrend across all time- frames — short-, medium- and long-term. In August, the stock took support at ₹260 and resumed its long-term uptrend.

It then decisively breached a key long-term resistance in the band between ₹300 and ₹310 in mid-October and continued to trend upwards.

But, after recording a new high at ₹377 last week, the stock show signs of weakness, and has begun to decline. The daily relative strength index as well as the daily price rate of change indicator display negative divergence backing the weakness, and also project that a short-term trend- reversal is on the cards.

Similarly, the weekly relative strength index also shows signs of trend-reversal. Therefore, you can consider taking partial profits off the table at this juncture and continue to stay invested for the long term. Correction from the current levels can initially find support at ₹337.

A further decline can test the vital support in the ₹300-310 band in the medium term. An emphatic plunge below ₹300 will later alter the medium-term uptrend and drag the stock down to ₹270 or ₹260 levels.

That said, to alter the intermediate-term uptrend, the stock needs to decline below ₹260 levels. Such a fall can extend the down-move to ₹210 over the long run. Investors with a long-term perspective can stay invested with a stop-loss at ₹190. An upward resumption from ₹300 can take the stock higher to ₹380 levels. The next key resistance is at ₹400.

Biocon (₹257.3): Following an intermediate-term downtrend, the stock of Biocon found base at ₹211 in August. The stock retested this support in September and reversed direction. Since then, it has been in a medium-term uptrend.

But the stock now tests resistance at ₹265 and witnesses a correction. A strong break above ₹265 will strengthen the uptrend and take the stock higher to ₹280 which is a key long- term hurdle.

A further break above this level will reinforce the bullish momentum and pave the way for a rally to ₹310.

On the downside, a near-term support at ₹240 can cushion the corrective decline. But a slump below ₹240 will bring back selling pressure and drag the stock down to ₹225 and then to ₹215 levels.

Investors with a long-term view can stay invested with a stop-loss maintained at ₹195.

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Published on November 17, 2019
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